(5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made."
51 The defendant submitted that the lease was unjust in the circumstances relating to it at the time it was made and that it should be declared void, at least in part, or varied to the extent of the special conditions. That contention was supported by the following propositions, which relate to the terms of individual special conditions and how they operate adversely to affect the defendant in ways wholly removed from what might ordinarily be considered to be his obligations as a lessor.
52 First, special condition 1 is an unfettered and apparently unrestricted acknowledgment by the defendant that the second cross defendant is beneficially entitled to two-thirds of the rent. Precisely why this should be so or where it comes from is completely unexplained. Standing alone, a special condition that substantially reduces the effective rent payable to the defendant is unjust. Not only is the special condition not reasonably necessary for the protection of the legitimate interests of the plaintiff, it operates in derogation of the true nature of the transaction and fundamentally alters the relationship of lessor and lessee that it was intended to create. It would undoubtedly be possible to describe it and its apparent purpose in terms considerably more critical of the plaintiff for whose naked advantage it was created.
53 Special condition 2 is no less extraordinary. It is predicated upon the subdivision of the property in some way and at some time that is not specified. Even so, the special condition appears in an unexplained way to assign to the ACN Trust the ownership of portion of the land when the subdivision comes into effect at an equally unspecified time in the future. The special condition is so curious that it is difficult to know how the plaintiff could ever have explained it to the defendant had he chosen to do so.
54 The terms of special condition 3 are not as difficult to understand as much as its place in the scheme of a residential tenancy. It operates as a mechanism by which the plaintiff can reduce or eliminate his obligation to pay rent by performance of work for the defendant at the property as a caretaker/manager. In one sense the condition is unexceptionable standing alone. Its significance appears to derive more from its place in what amounts to a suite of special conditions that provides several bases to the plaintiff for practical purposes to avoid the payment of rent.
55 Special condition 4 is as silent about the proposed subdivision as special condition 2. It assumes some agreement or arrangement that the property will be subdivided but gives no detail of it. It purports to provide just another way in which the plaintiff can perform unspecified work at an hourly rate that again allows him to avoid the payment of rent.
56 Special condition 5 is almost incomprehensible. It is probably so vague and uncertain as to be unenforceable. It is difficult, if not impossible, to comprehend what is meant by a "right . . . to all manner of building work on the premises and the grounds". It appears to assume an entitlement to demolish structures upon the property but does not say so in terms. It seems to contemplate the construction of "additions and new buildings and structures" but gives no indication of how or by whom or at whose cost these works will be performed, even though they are "to be at the sole discretion" of the plaintiff. The sentence that says that the tenant shall "as against the ACN Trust be entitled to a rental rebate of $50,000 for the cost of such work" is nothing less than nonsensical. The balance of the special condition is no better. It is also in direct conflict with the terms of printed clause 14 of the lease.
57 Special condition 6 is no more or less than a further provision aimed at reducing or eliminating the real obligation of the plaintiff ever to pay rent.
58 I have already referred to special condition 7. It is most unusual to find the grant of a power of attorney by a lessor to his tenant in any circumstances, but especially one expressed to be "for the purposes of [the] tenancy and the above clauses where necessary or convenient". I consider that its inclusion in the lease was just another attempt by the plaintiff to wrest control of the property from the defendant in a way that effectively neutralised the performance by the plaintiff of the only onerous obligation imposed on him by the lease.
59 Special condition 8 is also most unusual. It is in direct conflict with the terms of printed clause 21 of the lease. It is also in conflict with an unnumbered clause of the lease that provides that additional terms may be included in the lease if they do not conflict, among other things, with its standard terms. No attention to this inconsistency is evident elsewhere in the lease.
60 Special conditions 9 and 10 are also probably in conflict with clauses of the printed lease but are inconsequential in the scheme of things and require no further attention. Special condition 11 is not in conflict with the printed lease but is clear enough and is not unjust.
61 Special condition 12 is in a completely different category. To start with, the condition is uncertain and probably unenforceable for that reason alone. Significantly, however, the special condition would appear to give to the plaintiff the right to claim from the defendant the cost of work performed by the plaintiff in accordance with special conditions 3, 4 and 5 "as a debt due and payable" even though the plaintiff had the right under those special conditions to a rebate for the value of such work. There is no provision that regulates the relationship between the circumstances when the rebate is payable and when the cost of the work is recoverable. There is no definition of the expression "the value of any work done" and there is no mechanism for determining what that value might be. There is a potential for what is in effect a double counting to the significant disadvantage of the defendant. The special condition is definitively unjust.
62 Special condition 13 requires no comment.
63 The evidence before me has revealed that for whatever reason the plaintiff has never paid rent to the defendant. There has never been any proper reconciliation or accounting by the plaintiff to the defendant for the purposes of calculating any claim for a rebate of rent for work done or services provided. These are matters to which I am permitted to have regard in accordance with s 9(5) of the Act.
64 There is in my view no doubt in any event that the special conditions of the lease impose conditions that are unreasonably difficult to comply with and are not reasonably necessary for the protection of the legitimate interests of either party to the contract. The special conditions and their practical legal effect were also never explained to the defendant. In my view some of them were in any event inexplicable and the defendant could not have been expected to understand them even if they had been "explained". The defendant had no independent legal or other advice about the special conditions. The commercial setting of the contract as a lease of residential premises was in contrast to the unnecessarily extensive and wide ranging nature of most of the special conditions.
65 In my opinion all of the special conditions apart from special conditions 9, 10, 11 and 13 amount to provisions of a contract that were unjust in the circumstances relating to the lease at the time it was made. The defendant is entitled to an order pursuant to s 7(1) of the Act. I shall hear the parties on the question of whether the appropriate order to be made in the circumstances is an order under s 7(1)(a), (b) or (c).
The printed form lease
66 The balance of the lease terms consist in the standard Residential Tenancy Agreement printed form together with the handwritten additions to which earlier reference has been made. Only some of those terms require consideration in the context of whether or not the contract was unjust.
67 The defendant denies that he knew that the ACN Trust had been added by the plaintiff as a tenant under the lease. Whether he did or not, there appears to be nothing of consequence that flows from that fact, particularly when the special conditions are disregarded. The addition of the extra tenant did not create any disadvantageous practical or legal effect or result for the defendant and can be put aside for present purposes.
68 The rent clause provided for postponement of the payment of rent for a period of seven months from commencement. This was on the face of the lease in contradiction of the plaintiff's obligation to pay rent in advance on the first day of every six-month period. On one view, those provisions operated together to create an obligation upon the plaintiff to pay rent in arrears having regard to the commencement of the term of the lease on 30 June 2003 but in full for the relevant period once payments commenced. In the events that occurred, no rent was ever paid so that whatever unfairness the clause may have produced in theory was overtaken by practical considerations of another order. When one has regard to the terms of s 9(1) of the Act it is clear that, having regard to all the circumstances of the case, including the plaintiff's non-compliance with - indeed, his total disregard for - his obligation to pay rent, the curious wording of the rent clause in the lease has inflicted no particular injustice upon the defendant at all.
69 The only other matter requiring consideration is the fact that there is no clause describing the way in which any renewal of the lease by the plaintiff is or was to be effected. There is evidence that the plaintiff sent a letter during the currency of the first three-year term of the lease purporting to renew it for a further three-year term. The defendant never took any action to terminate the lease upon the basis that the plaintiff's renewal was ineffective and the issue has achieved no particular significance in the proceedings before me. There is no injustice that is apparent from these circumstances. The same can be said of the fact that the term of the lease was expressed to commence at a date well after the date it was executed.
70 In all of these circumstances it is my opinion that the lease, severed from the operation or effect of the nine special conditions to which I have earlier referred, was not unjust in the circumstances relating to it at the time it was made.
The balance of the cross claim
71 Having regard to the terms of the defendant's written submissions, only two other propositions were advanced. First, that the plaintiff was in breach of his fiduciary obligations to the defendant as his solicitor and that he acted in breach of those obligations in preferring his own interests to those of his client. Having regard to the view that I have formed with respect to the enforceability of the lease, however, there is no discernible loss that has been occasioned to the defendant as a consequence of any breach of fiduciary duty by the plaintiff that is not otherwise met by the defendant's ability to enforce the provisions of the lease according to its terms. In other words, if the lease were wholly set aside the plaintiff would presumably be left to enforce a remedy for mesne profits or possibly damages for use and occupation, with some potentially attendant uncertainties. In contrast, if the lease remains on foot the defendant's entitlement to rent, which the plaintiff acknowledges has never been paid and which is uncontroversially calculable, is unarguable. Moreover, if the plaintiff fails to pay the rent that is due he will likely be in fundamental breach of that lease, if he has not otherwise repudiated it by his conduct. These matters may be important considerations in any claim for possession that the defendant may commence.
72 Secondly, the defendant contends that the plaintiff was guilty of undue influence and that the plaintiff has not rebutted the presumption in favour of such a contention, having regard to the then existing relationship of solicitor and client. In my opinion, having regard to the unfortunate history of litigation between the plaintiff and the defendant and the matters to which I have just referred, I would decline to make orders consequent upon a finding of undue influence. The defendant would in my opinion be in no better position, and in all likelihood would be in a worse position, if the lease were set aside than if it were left to be performed according to its now reduced terms. This approach is also strongly suggested when one has regard to the overriding purpose.
Miscellaneous
73 I have earlier referred to the fact that the plaintiff and the defendant had been in a relationship at times and from time to time from about 1995. The evidence before me did not describe that relationship in detail or the periods when it was amicable or the times when it was not. In most cases the existence of such a relationship or the particulars of it would be and should be irrelevant and unimportant. There is not, and should not be, anything remarkable about this. However, the parties for their own reasons would appear to have chosen to quarantine or to limit the amount of information that I was given about the relationship. This would ordinarily be of little importance but in the particular circumstances of this case it had the collateral result that considerable evidence of potential benefit to me in reaching a decision in this case was unavailable. For example, the level of trust and reliance or mistrust and suspicion that may have existed at the time of the important events in these proceedings might have been to some extent informed by such material. Accordingly, in the events that have occurred, in coming to my decision I have made no assumptions and I have drawn no inferences in favour of or against either party based upon the existence or the state of their relationship at any particular time.
Conclusions
74 It follows that I find that the lease remains on foot subject to its modification to account for the offending special conditions. I would not in the circumstances of the case be prepared to grant the plaintiff an injunction in the terms that he seeks but would instead leave the parties to their respective rights under the lease. The parties should have an opportunity to consider these reasons and to take such steps as they may be advised having regard to the conclusions I have formed. To that end I propose to stand this matter over to some suitable date approximately four weeks hence with an expectation that the parties may give effect to the practical realities of my decision without the need for further contested litigation. I will hear the parties on the question of costs in those circumstances at the same time when I will also invite them to bring in short minutes of order to reflect my decision.
75 Accordingly, I would propose the following orders:
1. Summons dismissed.